Phillip Maddocks: Stocks soar as UBS is reported to be near a deal on a new illegal trade

News that UBS, the Swiss banking giant, is close to reaching a deal on an illegal trade with no redeeming societal value or ethical justification sent stock prices soaring in markets around the world and infused Wall Street analysts with a giddy optimism that had some predicting the Dow Jones average could close as high as 36,000 by the week’s end.

News that UBS, the Swiss banking giant, is close to reaching a deal on an illegal trade with no redeeming societal value or ethical justification sent stock prices soaring in markets around the world and infused Wall Street analysts with a giddy optimism that had some predicting the Dow Jones average could close as high as 36,000 by the week’s end.

The long-awaited and highly anticipated brazen, moneymaking descent back into the moral abyss by one of the world’s largest financial institutions set off a frenzy of trading activity and provoked rare public emotional displays by some of the most experienced and dispassionate players in the business.

In the wake of news of UBS’ criminal trade, the normally composed Goldman Sachs Chief Executive Lloyd Blankfein, a vampire squid cradled in one arm, feverishly pushed his way onto the floor of the New York Stock Exchange yesterday morning and zealously rang the trading bell until he had the full attention of the room,

“Let’s get to work, people! And remember, if you aren’t doing something you could go to jail for, then you aren’t doing your job!” shouted Mr. Blankfein, who was dressed in his “lucky” T-shirt, the one with the words: “God is Great … But Goldman Sachs is Greater.”

Impromptu exhibitions like Mr. Blankfein’s were reported at trading houses across the globe as traders, freed from the shackles of responsibility and fairness, readied to make up their own rules for a new run on the world’s financial resources.

“After a dismal four years of sort of trying to play by the rules, and with very little to show for the effort, this is just the kind of shot in the arm the Street needs,” said a CLSA/Credit Agricole analyst who specializes in large cap banking equity and illegal trading.

According to its statement, UBS is expecting to earn more than $4.5 billion on the deal — a complicated bet on false interest rates, AAA-rated toxic derivatives, and payouts for the 2020 Orange Bowl game. And UBS said that total doesn’t include possible revenues it could realize from colluding with rival banks and this year’s BCS champion to influence interest rates and further bolster the value of the deal — possibly tenfold.

Some traders at UBS predicted that rivals such as Barclays, Citigroup, Deutsche Bank, HSBC, J.P. Morgan Chase, and the Royal Bank of Scotland are just waiting for the wrong moment to jump in on the rogue deal.

“We’re neither admitting nor denying that there may be a sound investment in there, but we are certain that this trade is rigged in our favor,” said a UBS spokesman. “We cleared this with our legal department, and the lawyers there have assured us this deal is completely outside the law.”

Page 2 of 2 - Illegal trading analysts say the bank appears to have done its due negligence, noting that UBS has already received subpoenas from American and Japanese authorities and is also under investigation by Swiss and British regulators. The Financial Services Authority in Britain said it is operating closely with its American counterparts, with about 160 people working on various aspects of the illegal trade, which involves a number of currencies, a self-destructing algorithm, and a clue about the existence of the Higgs boson.

UBS, itself, expressed regret that the Commodity Futures Trading Commission wasn’t playing a more prominent role in discrediting the legality of the trade, but remained confident that the bank would be cleared of any right-doing.

To show the seriousness of what is being described as the trade’s “breathtaking breadth of criminality,” UBS said it is bringing back Kweku M. Adoboli as a special guest rogue trader to sign off on the suspect deal.

Mr. Adoboli, whose spurious trades forced UBS to post a $2.3 billion loss and prompted his arrest, said he had read the paperwork for the deal and was impressed with “the complete transparency of the utter opaqueness of the trade.”

Mr. Adoboli, who received a seven-year jail sentence for fraud last month, said he was honored to be included in such a momentous deception, calling it the closest thing he has seen to a “God trade,” one that could reveal the elemental forces of banking and the nature of finance itself.

“On the other hand,” Mr. Adoboli said, “the less we understand about this trade, the better off we’ll all be.”

Philip Maddocks writes political satire and humor for GateHouse Media and can be reached at pmaddocks@wickedlocal.com.